Page 68 - GSTL_16th July 2020_Vol. 38_Part 3

306 GST LAW TIMES [ Vol. 38
clarification to contrary, it is clarified that goods consumed during the pro-
vision of service, that are not available for sale, by the service provider
would not be entitled to benefit under Notification No. 12/2003-S.T., dated
20-6-2003.”
11. The contention of the assessee before the Tribunal was that the term
“sale” in Notification dated 20-6-2003 includes “deemed sale” under Article
366(29A) of the Constitution and therefore, if a service contract is a works con-
tract then no service tax can be charged on the goods component. The Tribunal
while dealing with the arguments of both the sides and various pronouncements
on the subject of valuation of photography services found that its earlier judg-
ments required reconsideration and therefore, referred the matter to the Larger
Bench. In respect of the Notification dated 20-6-2003, the referring Bench was of
the view that in a service of photography there is no sale of goods involved and
service element is dominant. The word ‘sale’ in the Notification has to be inter-
preted on the basis of its definition as given in Section 2(h) of the Act, which by
virtue of Section 65(121) of the Finance Act is applicable to service tax. It was fur-
ther opined that when there is no primary intention of the parties to sell paper,
consumable or chemical in providing photography service there is no room left
to plead [fiction of Article 366(29A)(b) of the Constitution] in absence of any such
sale of these commodities as goods. It further rejected the contention and held
that the word “sale” in Notification would not cover “deemed sale” under Arti-
cle 366(29A) of the Constitution and it is of no relevance inasmuch as Notifica-
tion does not override statutory provision. The Larger Bench was in agreement
with the said view when it held that expression “sold” in the Notification would
not include “deemed sale” of goods and material consumed by the service pro-
vider while generating and providing service, unless an assessee has discharged
burden of proof adducing evidence showing value of goods and material actual-
ly sold and satisfied the conditions of Notification. However, the Larger Bench
opined that value of taxable service of photography depends on the facts and
circumstances of each case as the Finance Act does not intend taxation of goods
and materials sold in the course of providing all the taxable services.
12. There is no dispute to the proposition that the Notification does not
override the statutory provision and hence, it is required to be seen as to wheth-
er the conclusion drawn by the Tribunal that term ‘sold’ appearing in Notifica-
tion has to be interpreted using the definition of ‘sale’ in the Central Excise Act,
1944 and not as per the meaning of “deemed sale” under Article 366(29A)(b) of
the Constitution, is correct or not.
13. From the aforesaid discussion, it would emerge that the crux of the
substantial question of law No. 1 which has arisen for consideration is : “whether
for the purposes of service tax the value of photography service can be deter-
mined separately from the value of certain consumables and chemicals which are
used on the paper for printing the image and whether such printed photograph
can be said to be a sale of goods in terms of Article 366(29A)(b) of the Constitu-
tion”. In this regard, before considering the first limb of the contention of
Learned Counsel for the appellants that in view of amended Article 366(29A) of
the Constitution, the material and consumables used in photography will qualify
as sale, it would be apt to refer to relevant clauses of the definition clause as con-
tained in Article 366(29A) of the Constitution and other enactments, which read
as under :-
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